SAP Insurance Collections and Disbursements: Functional Overview

SAP Insurance
Collections and
Disbursements:
Functional Overview
SAP FS-CD Points (1/2)
 Subledger system, accounting system, involves
debit and credit journal entries-tracks $$$ in and
$$$ out
 95% of the data comes from other systems – very

little manual input-CD originating documents are
only interest charges, write-offs, etc.
 Internally initiated transactions vs externally

initiated transactions-determines the CD process
to be utilized (not dictated by whether cash is incoming or outgoing)
SAP FS-CD Points (2/2)
 Designed for mass processing and huge

volumes – utilizes parallel processing
 Enhanced flexibility in account assignment

(similar to MM and SD)-usage of fields in the
document and not in account master data
 Postings to FI and CO-PA are on a summarized

basis; postings to Cash Management is on a
real-time basis
SAP FS-CD
Collections and
Disbursements
Functions
Interface to Upstream and Downstream

systems
Integration to SAP BW
SAP FS-CD Collections and
Disbursements - Functions
Master Data
Postings and Documents
Correspondence
Clearing and Payment Lots
Returns
Invoicing and Dunning
Installment Plan and Interest Calculation
Write-off and Submission for Collection
Broker
Customer Specific Function Modules
SAP FS-CD – Functions – Master Data

Business Partner
(BP)

Insurance
Contract Account Relationship
(CA) (IR)
Contract
Account
Relationship
(CAR)

Insurance Object
(IO)
2 BP ↔ 1 IO: 1 CA
Two insurance relationships

for the same insurance object
Business Partner 1 can be assigned to the same
Peter Goldstein contract account
Insurance
Relationship 1
Contract Account
Relationship 1
(Holder)
Insurance Object 1
Contract Account 1
Auto Insurance: KFZ987654
Contract Account
Relationship 2
(other Partner)
Insurance
Relationship 2
Business Partner 2
Linda Seiler
For this, each of the business partners

must have a contract account relationship
with the same contract account
2 BP ↔ 1 IO: 2 CA
Two insurance relationships

to the same insurance object
Business Partner 1 can be assigned to two
Peter Goldstein different contract accounts
Contract Account 1 Insurance

Relationship 1
Contract Account
Relationship 1
Insurance Object 1
Auto Insurance: KFZ987654
Contract Account
Relationship 2
Contract Account 2
Insurance
Relationship 2
Business Partner 2
Linda Seiler
For this, each of the business partners

must have a contract account relationship
with another contract account
Control
Control Parameters
Parameters: and Attributes – Summary
Summary
Posting data:
Document header
 Addresses and and line item
communication
 Address usage
Business Many control parameters can be overwritten or
 Bank details extended with data that is contained in
Partner documents.
 Payment cards
Payment methods or dunning procedures can be
 Relationships defined for the document, for example.
n n
Contract Acct Relationship Insurance Relationship
m
n Insurance Object
m 1
 Payment control  Payment control
Contract Account
 Payment card/bank details ID  Payment card/bank details ID
 Interest calculation  Interest calculation
 Correspondence control  Correspondence control
 Dunning variant  Dunning variant
 Account relationship  Broker
 Account view  Broker collections
 Tolerance group  Payment plan/payment plan item
 SAP AG 2003
SAP FS-CD Master Data
 It is very important!
 It is very critical!
 It is a very strategic decision!
The design of your master data – how you parallel BPs

to CAs to IOs has a huge effect on future optimization
for clearing methodology, reporting requirements,
volume and stress, interface with Legacy systems and
other SAP modules, link to BW extracts, etc.
Recommendation – Use an NCC CD consultant!!!!!

Master Data
Correspondence
Returns
Broker
Document Structure
Document Header
BP Item  Document number G/L Items

 Reconciliation key
 Company code
 Document type  Company code
 Business partner
 Document currency  Revenue/expenses
 Contract account
 Document date  Amount
 Insurance object
 Posting date  Additional account
 Receivables/payables determination for
 …
 Amount statutory reporting
 Due date  Main/subtransaction
 Product group  Profitability segment
 Insurance type  Order
 Main/subtransaction  Cost center
 …  …
Clearing Documents
 Every open item, meaning every receivable or payable,

must be cleared at some point
 Clearing indicates that the receivable or payable no longer
exists
 Various business processes lead to the clearing of open
items, such as:
Payment The customer pays a receivable with a payment or we pay a

payable with a payment
Reversal The receivable or payable was unauthorized and is reversed
Offset Receivables and credit on a contract account, or for a business

partner, are cleared with one another
Write-off Receivables cannot be collected and are written off in a revenue

effective manner
Customizing: Maintain Account Determination for
Receivables/Payables
Buttons to change
chart of accounts and
to simulate account
determination.
A G/L account is assigned to the

combination of product group (PG), Main
transaction (MTrans), and Subtransaction
(STrans).
Account Display: Result of Customizing
Master Data
Correspondence
Returns
Broker
Correspondence Creation
 Within a business process (such as a dunning letter or

returns notification)
 With correspondence runs (such as invoice, account

statement)
Customizing: Correspondence Types
Define the insurance

company’s own
correspondence types
in the customer name
range. Otherwise,
they are modifications.
Correspondence Container: Concept
Application program 1
.
. Correspondence Container
.
Application program n
.
. One report for printing
.
Corr. setting Every application program with

prog.1............n print output loads the
correspondence container
Correspondence container is a buffer in which correspondence data for printing is stored

temporarily. This data is temporarily stored in the correspondence container during event
driven or periodic correspondence creation. This data is accessed when the user performs
a correspondence print run.
More Correspondence Characteristics
 History management options

 Lock options
 Support for multiple languages
 Dispatch control
 Archiving
 Parallel processing
Master Data
Correspondence
Returns
Broker
Clearing – Example for a Receivable
 Assignment of an incoming
payment to a receivable, or
 Assignment of receivables
and credit on an account, to
get
 Closure of receivable
Open amount Paid amount
Payment Transactions
Initiated by Customer Initiated by Insurance Company

Incoming payment from direct payers: Incoming and outgoing payments
 Bank transfer  Bank collection
 Standing order  Payment card
 Incoming check  Outgoing transfer
 Outgoing check
Additional:
Internal clearing in CD
Payment lot, check lot, and so on Payment program

Payment Lot: Processing Steps
New Lot Create & Lot Processed

Close Post
Save
Error
Display /
Change
Postprocessing:
Postprocessing
Clarif. Worklist
A payment lot can be reopened

before posting, with the appropriate
authorization.
Clearing Control
Clearing control encompasses the configuration

associated with clearing – clearing variants, clearing
types, clearing categories, and other specifications.
Clearing control is used to monitor:

 The assignment of an incoming payment to open items on a
contract account (payment lot, check lot...)
 The automatic assignment of credit/receivables on a contract
account (automatic clearing)
 The manual assignment of credit/receivables on a contract
account (optional)
Master Data
Correspondence
Returns
Broker
Returns: Definition
 Returns occur if the bank

responsible for a business
partner is unable to execute a
debit memo procedure, or if
the business partner refuses
payment.
Returns Customizing
Returns reasons
Associations with banks
Account assignment
Document type
Clearing reasons
Correspondence form
Other
Returns Lot: Close and Post
1 2 3 4
Lot is now Clarification,

complete and if required
Lot can be posted
open Lot Closed
Can be
changed
Create Lot can not be changed

new or without appropriate
change authorization
Customizing: Returns Reason
Returns History
Transaction FPM4 – Returns history

Master Data
Correspondence
Returns
Broker
Customizing: Invoicing
Invoicing Customizing
Create invoice types

 Can include or exclude individual payment methods
 Can include or exclude already invoiced items
 Can include or exclude statistical items
 Can include or exclude negative line items
 Can disregard negative invoice totals
Assign invoice type to a correspondence

variant
Define the invoice type in the master data
for IO or CA
Customizing: Dunning
Dunning Process
Insurance company can create and send

payment reminders or dunning letters to
business partners to remind them of
overdue payables and to request payment.
Insurance company can print

correspondence using the
Correspondence procedures and
application forms.
There are dunning procedures, levels, activities,

variants, groupings, charges, locks, runs, history...............
The Dunning Process in FS-CD
Dunning Item Dunning

Open item due for dunning activities run
proposal run
Customizing:
No payment:
Read dunning history
Next dunning level
master data
Activities:
Correspondence
Notes to clerk
Charges
Incoming payment, Interest
Dunning end run
master data change
Entry in dunning
history for Entry in dunning
Create installment plan,
ended history for
manual ending in
dunning current
dunning history
procedure dunning procedure
Dunning Proposal Run
1 Determine Items Due

for Dunning
2 Group Items
Determine Dunning Groups

3 Determine Dunning
Dunning
Levels from History
Proposal
Dunning Items
4 Check Minimum
Amounts for Dunning
Level
5 Check Conditions for

Dunning Level
Master Data
Correspondence
Returns
Broker
Installment Plans
An installment plan is an agreement in which a

business partner consents to pay off an
outstanding receivable in partial payments.
Once an installment plan is created, it then

represents new documents.
The number of the installment plan is saved in the

source item. This ensures a connection between
the installment plan and the source receivable and
between the source receivable and the installment
plan. If interest is payable on an installment plan,
the installment plan will also have an interest
supplement.
Installment Plan Interest Calculation
 When creating an installment plan, interest can be

calculated and included in the installment plan items
 Interest is calculated for the open installment plan items
 Installment plan interest refers to periods in the future (duration
of installment plan)
 Calculation takes place with the expectation that the installment
plan items will be paid on their respective due dates
 Retroactive interest calculation

 Retroactive interest calculation on the basis of payment streams
that have actually taken place
Master Data
Correspondence
Returns
Broker
Write-offs
 Use write-off functionality when a receivable is

deemed uncollectible or a payable cannot be
disbursed
 Can write off complete amounts or partial amounts
 System automatically makes an offsetting entry to

revenue or expense
 Can specify check rules for open items, i.e. an

open item can only be written off if there are no
other open items
Submission for Collection
 If a customer does not pay a receivable, the CD system

enables you to manage postings connected to submitting
receivables to a collection agency and the electronic
exchange of information with those collection agencies.
 2 step process – first, release item and second, submit
item
 System can determine the collection agency or it can be
specified during the submission step
 Can call back receivables already submitted to a
collection agency or re-submit to another agency
 Can use a mass process to compile a file for the
collection agency
Master Data
Correspondence
Returns
Broker
Broker
 This allows an insurance company to process transactions

and have communications with the customer through a
broker. A broker can be any third party.
 Master data for brokers
 Assignment of customer to broker
 Postings
 Broker report
 Account balance display
 Correspondence
 Evaluating open items
 Histories
 Broker hierarchies
Master Data
Correspondence
Returns
Broker
The event concept enables the

insurance company to integrate the
SAP source code encapsulated and
therefore exchangeable in function
modules at specific points in the
program logic using defined
interfaces.
Functions
systems
Subledger and Integration
Business
Partner Bank
SAP R/3 General Ledger

Policy
Mgmt
FS-CD Profitability
Coll. / Analysis
Commission
System Disb.
Cost Center /
Profit Center
Claims Mgmt
Cash Management
Calculating Invoicing
Systems System
Subledger
External Data Transfer Process
Customizing: Define Sender Structure
Activities for external data transfer are defined in

Cross-Application Components
 SAP Business Partner
 External Data Transfer
Functions
systems
Integration to BW
 CD is not plump with delivered reports
 However, a variety of reports can be easily created using

any combination of the characteristics as key figures.
 Reports on key figures can be designed by amounts and

across time spans using the time characteristics.
 Also can build a custom extractor from any R/3 table to

populate the business content cube or a new cube.

SAP Insurance Collections and Disbursements: Functional Overview

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SAP Insurance

 95% of the data comes from other systems – very

 Internally initiated transactions vs externally

 Designed for mass processing and huge

 Enhanced flexibility in account assignment

 Postings to FI and CO-PA are on a summarized

Interface to Upstream and Downstream

Two insurance relationships

For this, each of the business partners

Two insurance relationships

Contract Account 1 Insurance

For this, each of the business partners

The design of your master data – how you parallel BPs

Recommendation – Use an NCC CD consultant!!!!!

BP Item  Document number G/L Items

 Due date  Main/subtransaction

 Product group  Profitability segment

 Insurance type  Order

 Main/subtransaction  Cost center

 Every open item, meaning every receivable or payable,

Payment The customer pays a receivable with a payment or we pay a

Reversal The receivable or payable was unauthorized and is reversed

Offset Receivables and credit on a contract account, or for a business

Write-off Receivables cannot be collected and are written off in a revenue

A G/L account is assigned to the

 Within a business process (such as a dunning letter or

 With correspondence runs (such as invoice, account

Define the insurance

Corr. setting Every application program with

Correspondence container is a buffer in which correspondence data for printing is stored

 History management options

Initiated by Customer Initiated by Insurance Company

Payment lot, check lot, and so on Payment program

New Lot Create & Lot Processed

A payment lot can be reopened

Clearing control encompasses the configuration

Clearing control is used to monitor:

 Returns occur if the bank

Lot is now Clarification,

Create Lot can not be changed

Transaction FPM4 – Returns history

Create invoice types

Assign invoice type to a correspondence

Insurance company can create and send

Insurance company can print

There are dunning procedures, levels, activities,

Dunning Item Dunning

1 Determine Items Due

Determine Dunning Groups

5 Check Conditions for

An installment plan is an agreement in which a

Once an installment plan is created, it then

The number of the installment plan is saved in the

 When creating an installment plan, interest can be

 Retroactive interest calculation

 Use write-off functionality when a receivable is

 Can write off complete amounts or partial amounts

 System automatically makes an offsetting entry to

 Can specify check rules for open items, i.e. an

 If a customer does not pay a receivable, the CD system

 This allows an insurance company to process transactions

The event concept enables the